What does it say when Goldman Sachs no longer wants you but others rush in? The US bank has sold its remaining stake in ICBC, the world’s biggest bank by market capitalisation, to realise almost three times the initial investment. In truth the deal does not say much more than that’s private equity for you.
Goldman Sachs paid $2.6bn in 2006. In five sales, including this week’s, it has netted profit of $7.3bn for a compound annual return of 25 per cent. Nice. Since Goldman took a pre-listing investment, ICBC’s assets and revenues have nearly trebled, while profits rose by a factor of six. Since it listed in October 2006 its shares have gained two-thirds.
But it has not all been smooth sailing. The volatility of the stake, marked to market prices, provided a roughly $500m drag on two occasions, although on average it added that much each year. And the profit does not account for the costs of the Goldman expertise that has been shared with ICBC. Nor does the bank take all of the proceeds: some of the stake was held for clients.